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OTB Ventures’ internal 150 million deep tech fund launch

 


Does Central Europe have the potential to become a European engine for deep innovation? What are its competitive advantages and opportunities?

Poland-based VC fund OTB Ventures is betting on this outlook with its recent €150 million ‘Fund 2’ from InvestEU. OTB Ventures is the CEE region’s leading capital firm, investing in early growth, post-product and deep tech startups. Their current portfolio includes companies such as SettleMint and Hydrosat, with successes at Minit and BabbleLabs.

We met with Adam Niewinski, co-founder and general partner of OTB Ventures, to discuss his views on the region, his plans for OTB’s new fund, and what he looks for when investing in startups. Adam has over 20 years of experience as an entrepreneur and senior manager and has been an angel investor for over 10 years.

The Recursive: What are your top priorities in recent news about the recently announced Fund 2, and what sectors do you consider strategic?

Adam Niewinski: Frankly, I’d love to do more of the same in the four sectors we’re particularly focused on: space tech, AI automation, fintech infrastructure, and cybersecurity. We actually want to do more within Climate Tech, but within those four sectors.

All of a sudden, instead of saying we’re trying to present ourselves as climate experts, we want to look at these sectors for opportunities in that area. For example, Space Tech companies that can provide satellite imagery of deforestation and drought, and companies that use technology to improve crop yields.

“Good technology, sustainable technology, should also be good business. So we try to see great business as great for the climate and the planet.”

Another thing I would say that we’re changing a bit is that we’re more open to investments outside of CEE. I believe that I have the ability to And whether the company is in Luxembourg, Finland or the Czech Republic, all these businesses are global.

However, it does not leave CEE. On the contrary, being a company in the CEE region, we get a lot of value out of it. CEE remains a core market for us.

Finally, make more seed trades. In “Fund 1”, we focused on Series A very seriously – post-product, post-revenue, great revenue traction. “Fund 2” allows you to pursue a limited number of opportunities a short while ago. Of course, you have to make sure this is a very exciting technology and a very experienced team to consider investing in.

What is your focus in the deep tech space?

How you understand deep technology or real technology is a good place to start. For us, this is a disruptive technology with unique IP, a company with breakthrough technology, a diverse and strong technical team, and a company with advanced products.

We see this in multiple areas, such as space technology and AI automation. Rather than focusing on B2C solutions, we see a lot of real technology in fintech infrastructure, such as blockchain and payments. Finally, there is cyber security. This is his fourth area that we particularly want to invest in. So it doesn’t have to be quantum computing. And, in fact, we much prefer such genuine technologies that have a visible path to revenue or are preferably already in the early stages of revenue growth. Instead, leave it to the university. But beyond that, there’s something technically truly disruptive. More than just a cool app for e-bikes, for example.

Could you change the topic to the region where you primarily operate and share your view on the CEE and its potential as a deep tech hub? What competitive advantages and opportunities are there? do you have?

There are a lot of very talented people in the area and I’m sure the percentage of highly technically gifted people is well above average. This is the real strength of the region.

For example, when you think of art, you might think of Italy, where you can walk into any city, you can see the buildings, and everything is beautiful. CEE emphasizes technical skills for historical and educational reasons. See how this region is overrated when it comes to great mathematicians, physicists and chess players.

What we usually miss is commercial skills. To add, or perhaps expand on, I would add my confidence on a global scale. There you have this ability to do the “impossible” and present them in a perfect way.

You can see people in this area struggling to bring themselves and their skills to their true potential.

I understand that negotiations for ‘Fund 2’ have been going on for some time, how has the current economic scenario affected these negotiations?

Let’s start with the fact that in “Fund 1” we were already able to return half of our investment to our investors, a so-called DPI of over 0.5%. Last year he made two exits from Bubble Labs to Cisco and this year from Minit to Microsoft, both very successful deals with his triple-digit IRR.

Returning the investment from ‘Fund 1’ back to the investor will go a long way towards raising another capital. And of course, looking at our portfolio, there are still companies out there that we believe will be fund returns.

And because of the trust we’ve built with our current investors, I’d say most of our current investors have actually increased their exposure and doubled to us.

Second, you can get new, credible investors. We are pleased that experienced investors like Tomasz Domogala (of TDJ Holdings) and Marcin Zukowski (co-founder of Snowflake) have decided to invest in his OTB Ventures.

Investor confidence in ‘Fund 1’ helped smooth the building process for ‘Fund 2’.

You said you are very focused on the people who are part of the company. What do you look for in people when investing in companies?

VC is above all a business of people, so first of all it is necessary to build a good relationship with the founder of the investee company. Usually, it is a long-term relationship of about 10 years, so we understand each other well. But it’s also about interactions with other investors, and LPs with co-investors.

If there’s one thing I want to emphasize in particular, it’s that founders (or founders) have a very strong point of view and can change it very quickly.

What I’m looking for is a founder with a strong, established vision, experience-built, and a good understanding of the sector of the industry in which he or she operates. It is also very important to him or her that he or she is willing to listen to others. It means coming up with the perspective of, but not ignoring what you hear.

A good idea is not always good from start to finish. Sometimes you have to change something and you have to pivot. The economy is always changing, the environment is changing, the competition is changing, so either someone is willing to adopt all of this, or it becomes difficult.

Given the forecast of a recession next year, have you considered a pivot or turnaround to deal with the situation?

No, not really. For example, I haven’t paid much attention to NFTs. Nor was he obsessed with crypto or Web3. An idea that had a great moment, but the reality check isn’t as good as many thought.

Basically sticking to what we’re doing and staying on course with a focus on the actual technique. Don’t get too excited, don’t get too depressed. We continue to invest and have recently focused on the company’s ability to reach breakeven. It’s not about how fast you can grow, it’s about your ability to understand when and how you break even.

From a macro perspective, what do you see as the next steps for OTB Ventures?

As we are definitely strengthening our team, we plan to add more people to OTB to better cover both geographic areas and verticals. We see Deep Tech as a dynamically growing concept in Europe with the flowering of CEE.

Great companies pop up in amazing cities, and I personally love it. Today, cities with universities and polytechnics are where you can find the next big companies.

I think we have a lot of work to do in the areas that we are focusing on. I don’t think there will be enough work to be done.

Sources

1/ https://Google.com/

2/ https://therecursive.com/interview-adam-niewinski-otb-ventures/

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